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("Tidewater") common stock to reduce the Company's $17.5 million in notes due to
Norex America, Inc. Remaining mandatory principal payments for the next twelve 
months total $8.4 million. In July 1995, a subsidiary of the Company, Zapata 
Protein, Inc., arranged a $15.0 million bank credit facility.

     Cash provided by operating activities totalled $5.7 million during the 
first nine months of fiscal 1995 as compared to a $12.1 million use of cash 
during the corresponding prior-year period. The use of cash in fiscal 1994 was 
primarily due to increases in working capital. Cash provided by investing 
activities totalled $11.7 million during the first nine months of fiscal 1995 as
compared to $76.4 million during the first nine months of fiscal 1994. The 
fiscal 1994 period included proceeds of $85.9 million from the sale of 4.13 
million shares of Zapata's Tidewater common stock. Net cash used by financing 
activities totalled $27.0 million during the first nine months of fiscal 1995 as
compared to $71.9 million in the corresponding prior-year period, which included
a $68.5 million prepayment of senior debt.

     In April 1995, Zapata repurchased 2.25 million shares of Zapata's common 
stock from Norex America, Inc. for $4.00 per share. The shares repurchased by 
Zapata represented 7% of the Company's then outstanding common stock. Following 
the repurchase of these shares, Zapata had approximately 29.5 million shares of 
common stock outstanding.

     In June 1995, Zapata announced that its board of directors had authorized 
the repurchase of up to 7.5 million shares of its common stock depending on
market conditions.

     In August 1995, Zapata announced that it had acquired 31% of the 
outstanding common stock of Envirodyne Industries, Inc. ("Envirodyne") for $18.8
million from Malcolm Glazer, Chairman of the Board of Zapata and a director of 
Envirodyne. Zapata paid the purchase price by issuing to the seller a
subordinated promissory note bearing interest at prime and maturing in August
1997. Envirodyne is one of the world's major suppliers of food packaging
products and food service supplies. This acquisition is the first major step in
the transformation of Zapata away from the energy business and into food-related
businesses. Zapata is evaluating acquiring additional shares or proposing a
merger with, or acquisition of, Envirodyne in the future.

RESULTS OF OPERATIONS

     Zapata's net income of $1.8 million for the third quarter of fiscal 1995 
compared favorably to the fiscal 1994 third quarter net loss of $9.6 million. 
Net income includes income from the discontinued natural gas compression 
operations of $537,000 in the fiscal 1995 period and $1.1 million in the 
corresponding fiscal 1994 period. The discontinued natural gas compression 
results include allocations of interest on general corporate debt of $341,000 in
the fiscal 1995 quarter and $650,000 in the fiscal 1994 quarter. The fiscal 1995
third quarter net income also included net income of $8.9 million from
discontinued operations as a result of the reversal of an estimated loss on the
disposition of the marine protein operations which was recorded in fiscal 1994.

     The Company's net loss from continuing operations of $7.7 million for the 
three months ended June 30, 1995 compared favorably to a net loss of $10.7 
million for the corresponding 1994 period. The fiscal 1995 results include a 
$12.6 million pretax provision for asset impairment of the Company's marine 
protein assets as a result of adopting Statement of Financial Accounting 
Standards No. 121 ("SFAS 121") while the fiscal 1994 results include a pretax
valuation provision of $18.8 million associated

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